Infosys, TCS, Wipro: Trading strategies for IT stocks post their Q2 results

The second quarter results for financial year 2019 – 20 (Q2FY20) of information technology (IT) majors have been a mixed bag.

For Q2, Wipro posted a 35.1 per cent rise in its net profit at Rs 2,552 crore. During the quarter, consolidated revenues of the Bengaluru-headquartered firm rose 4 per cent on year-on-year (YoY) basis at Rs 15,125 crore.

Tata Consultancy Services (TCS), on the other hand, posted 1.8 per cent year-on-year (YoY) rise in its net profit at Rs 8,042 crore for Q2FY20. On a sequential basis, the numbers slipped 1.09 per cent. 

For the period under review, Infosys' revenue growth was tad lower than what analysts had forecast. It, however, outperformed on the margin front and reported an EBIT (earnings before interest and tax) margin of 21.7 per cent, a rise of 120 basis points (bps). Analysts had pegged the increase at 100 bps.

Here's how these three heavyweights look on the technical charts post their respective Q2FY20 results.

NIFTY IT INDEX: The index is showing weakness below its 50-weekly moving average (WMA), as it failed to conquer this level in last two weeks. The 50-WMA is currently placed at 15,440 levels and a close above this can see a rally towards 16,000 and 16,250. That said, Moving Average Convergence Divergence (MACD) has broken the zero line on the downside, which indicates weakness. As per the daily chart, every rise above 15,400 may see selling pressure. On the other hand, 15,000 remains a support for the index. CLICK HERE FOR THE CHART

Tata Consultancy Services (TCS): The recent dip below 200-day moving average (DMA) was seen as a buying opportunity. The counter hit Rs 1,925 recently and is now trading at Rs 2030 levels, which is near its 200 DMA. A jump of over 5 per cent in the last few sessions indicates a breakout, as per the technical charts. The resistance of Rs 2,100 seems to be the immediate target level for this counter. The support comes at Rs 1,960. This up move is supported by the Relative Strength Indicator (RSI) that has just made a positive crossover. If the Moving Average Convergence Divergence (MACD) also makes a positive crossover going ahead, then the upside may see rise in the trading volumes as well. CLICK HERE FOR THE CHART

Infosys Ltd (INFY): The counter is witnessing severe pressure in the range of Rs 820 – Rs 800. Due to this, the lower support has started losing strength. A gap-down close has further weakened the positive momentum. If Infosys trades below Rs 770 for some more time, it may then head towards Rs 740 and subsequently Rs 715 levels. Rs 780 remains a resistance on closing basis. Only a close above this may see the sentiment turn in favour of bulls. CLICK HERE FOR THE CHART

Wipro Ltd (WIPRO): The counter has formed “lower lows, lower highs” on the charts and broke the 50-WMA. Though the stock is currently hovering around its 100-WMA of Rs 241.30. Unless it exhibits signs of consolidation and conquers its previous high of Rs 260, the weak sentiment may persist. The MACD is trading below the zero line with a negative crossover, a sign of bearishness. However, Relative Strength Index (RSI) has turned upward and in the process of positive crossover. If that happens then one can see Wipro head towards Rs 260. CLICK HERE FOR THE CHART